§ 35-10-11 - Additional investment powers.
SECTION 35-10-11
§ 35-10-11 Additional investment powers.– The state, any state agency, any city or town, and any municipal agency whichhas, or has control of, any funds not immediately required for other purposesmay, in addition to other investments in which it may be authorized to investby law, and notwithstanding any provisions of any special law or municipalcharter to the contrary, invest these funds, either individually or with eachother, in:
(1) Deposits in banks, savings banks, national banks or trustcompanies, loan and investment companies, credit unions; and in shares ofbuilding-loan associations; the principal office of which institution orinstitutions is located in this state or which has a deposit-taking facilitywithin this state; provided, that the investments shall be made as would bedone by prudent persons of discretion and intelligence in these matters who areseeking a reasonable income and preservation of their capital;
(2) Shares or units of beneficial interest of any open endinvestment company or association or investment trust which is registered underthe federal Investment Company Act of 1940, 15 U.S.C. § 80a-1 et seq.;provided, that the company, association, or trust shall:
(i) Limit the issuance, distribution, and ownership of itsshares or units solely to this state, state agencies, cities and towns of thisstate, and municipal agencies thereof, other than shares or units issued inconnection with the initial capital required by the federal Investment CompanyAct of 1940;
(ii) Invest solely in securities and investments which arelawful for investments of savings deposits as set forth and defined in chapter3 of title 19, without regard to the provisions of this chapter as topercentage of deposits which may be so invested, or are lawful for investmentof reserve funds by cities and towns under § 45-11-1, but subject to therestrictions that:
(A) No investment shall be made in any security or investmentauthorized under chapter 3 of title 19, unless, after giving effect to theinvestment, no more than ten percent (10%) of the total assets of the company,association, or trust shall be invested in securities or investments of a classor type authorized solely under this chapter;
(B) No investment shall be made in any security or investmentauthorized under chapter 3 of title 19, unless, after giving effect to theinvestments, no more than five percent (5%) of the total assets shall beinvested in the securities or investments authorized solely under this chapterof any one issuer or obligor; and
(C) If the lawful investments constitute collateral for anyrepurchase agreement, the company, association, or trust shall take delivery ofthe collateral either directly or through an authorized custodian; and
(iii) Invest solely in such of the investments as would bedone by prudent persons of discretion and intelligence in these matters who areseeking a reasonable income and preservation of their capital; and
(3) Notwithstanding the provisions of paragraphs (1),(2)(ii)(A), and (2)(ii)(B), in:
(i) Obligations issued or guaranteed by the United Statesgovernment or any agency or instrumentality thereof and repurchase agreementsfully collateralized thereby, or in securities of any open end investmentcompany or association or investment trust, custodial arrangement, or poolwhich is registered under or exempt from the federal Investment Company Act of1940, provided, that the portfolio of the company, association, trust,custodial arrangement, or pool is limited to obligations issued or guaranteedby the United States government or any agency or instrumentality thereof andrepurchase agreements fully collateralized thereby and that the company,association, trust, custodial arrangement, or pool takes delivery of thecollateral either directly or through an authorized custodian, agent, ordepository; and
(ii) Any security of a state or political subdivisionthereof, or in securities of any open end investment company or association orinvestment trust, custodial arrangement, or pool which is registered under orexempt from the federal Investment Company Act of 1940, provided, that
(A) The portfolio of the company, association, trust,custodial arrangement, or pool is limited to state or political subdivisionsecurities and repurchase agreements fully collateralized thereby;
(B) The company, association, trust, custodial arrangement,or pool takes delivery of the collateral either directly or through anauthorized custodian or depository;
(C) The interest on the securities is exempt from federalincome taxation;
(D) At the time of the investment, the security (in the caseof a security issued by or on behalf of a state or political subdivisionthereof) has a rating as determined by a national rating agency of municipalobligations equal or superior to the last rating by the agency applicable togeneral obligations of the state or (in the case of a fund) the fund investssolely in securities having these ratings;
(E) In connection with the investments, the state, stateagency, city, town, or municipal agency may enter into contracts to purchaseand resell the investments at specified or determinable prices.
(4) Notwithstanding the provisions of subdivision (1), incertificates of deposit obtained in accordance with the following conditions:
(i) The funds are initially invested through a financialinstitution as defined in subdivision 19-1-1(8) or chapter 19-1, selected bythe investing governmental entity;
(ii) The selected financial institution arranges for thedeposit of the funds in certificates of deposit in one or more federallyinsured banks or savings and loan associations, for the account of thegovernmental entity;
(iii) The full amount of the principal and accrued interestof each certificate of deposit is insured by the Federal Deposit InsuranceCorporation;
(iv) The selected financial institution acts as custodian forthe governmental entity with respect to the certificates of deposit issued forthe governmental entity's account; and
(v) At the same time that the governmental entity's funds aredeposited and the certificates of deposit are issued, the selected financialinstitution receives an amount of deposits from customers of other banks andsavings and loan associations, wherever located, equal to the amount of fundsinitially invested by the governmental entity through the selected financialinstitution.
(5) Public deposits placed in accordance with the conditionsprescribed in this subsection shall not be required to be secured by eligiblecollateral as set forth in chapter 35-10.1.